Can You Get a Mortgage Loan After a Short Sale?
When it comes to getting approved for mortgage loans, the process can be complicated and time-consuming. But if you’ve gone through a short sale in the past, that doesn’t mean your dreams of homeownership are over – there is still hope!
In this article, we will discuss what exactly qualifies as “short sale,” how long after one you must wait before applying for another loan, and tips on increasing chances of approval.
Overview of the Short Sale Process
A short sale is a transaction that occurs when a homeowner sells their property for less than what they owe on the mortgage. The lender agrees to accept the lesser amount, and the homeowner is then released from any additional responsibility for paying back the loan.
During this process, however, homeowners will typically experience a significant negative impact to their credit score.
Can You Get a Mortgage Loan After a Short Sale?
The answer to this question depends entirely on your financial situation and specific circumstances surrounding your short sale.
Generally speaking, it may be possible to qualify for a mortgage loan after going through a short sale. It depends on factors such as your credit score, debt-to-income ratio, and the amount of time that has passed since the short sale.
What Does it Take to Qualify for a Mortgage Loan After a Short Sale?
The specific qualifications for getting approved for a mortgage loan after a short sale varies from lender to lender. However, lenders may require borrowers to have at least three years of good credit history following the short sale in order to qualify.
Borrowers should also be prepared to provide evidence of financial stability such as proof of employment and income. Additionally, most lenders will look more favorably upon applicants who make significant down payments on their new purchase in order to reduce their risk.
What are the Benefits of Going Through a Short Sale?
The primary benefit of going through a short sale is that it allows homeowners who are struggling financially to get out from underneath their existing mortgage without going into foreclosure.
Additionally, borrowers who qualify for a short sale may be able to avoid having to pay the difference between what is owed on the loan and what their house sells for. This can help them save money at a time when they are already struggling financially.
Finally, qualifying for a short sale can also have positive impacts on your credit score in the long run.
Who is Eligible to Apply for a Short Sale?
In most cases, borrowers who are struggling financially and are unable to keep up with their mortgage payments may be eligible to apply for a short sale. Qualifying applicants must typically demonstrate that they have experienced a significant hardship (such as job loss or medical expenses) which has impaired their ability to make mortgage payments.
Additionally, borrowers must usually provide evidence of financial distress in order to qualify for the program. Eligibility varies from lender to lender, so it is important to research your options and speak with an experienced loan officer before making any decisions.
The Impact of Your Credit Score on Your Ability to Get a Mortgage Loan
Your credit score is an important factor in determining whether or not you can get approved for a mortgage loan after a short sale. Generally speaking, lenders are more likely to approve applicants with higher credit scores as they represent less of a risk.
However, even if your credit score is lower, you may still have options available depending upon the lender and other mitigating factors.
What Should You Keep in Mind When Applying for a Mortgage After Going Through a Short Sale?
When applying for a mortgage after going through a short sale, it is important to keep several things in mind. First and foremost, you should make sure that you have taken all necessary steps to improve your credit score before submitting an application.
It is also important to work with an experienced mortgage broker who can provide guidance and access to different lenders who may be more willing to work with applicants with less-than-perfect credit scores. Making a substantial down payment on your new purchase, if possible, can also help increase your chances of getting approved for a loan.
Ultimately, qualifying for a mortgage after going through a short sale is possible but not guaranteed. Working closely with an experienced lender and taking the necessary steps to improve your financial standing are key in increasing your chances of being approved for financing after a short sale.
Strategies to Improve Your Chances of Getting Approved for a New Mortgage Loan
If you are hoping to secure a new mortgage loan after a short sale, there are a few steps you can take to increase your chances of approval.
First you should take the necessary steps to improve your credit score, including paying off any outstanding debts or taking other measures to demonstrate financial responsibility.
Additionally, you should work with a good mortgage broker who can provide guidance as well as access to different lenders who may be more open to cooperating with you.
Conclusion
Qualifying for a mortgage loan after a short sale is possible. It’s important to understand that getting approved will depend on many factors, and there are steps you can take to increase your chances of getting approved.
Taking the time to improve your credit score, working with an experienced mortgage broker, and making a substantial down payment on your new purchase can all be beneficial when it comes to securing a loan after a short sale. With proper planning and preparation, it may still be possible for you to purchase property you always wanted or needed.
FAQs
Q: Will I be able to get a mortgage loan after a short sale?
A: It is possible, but not guaranteed. Your eligibility will depend on many factors, including your credit score and financial situation. Taking steps such as improving your credit score and making a substantial down payment can help increase your chances of being approved for financing.
Q: Is there a waiting period after a short sale before I can apply for a mortgage loan?
A: Depending on your lender, there may be a waiting period of two or more years after the short sale before you are eligible to apply for financing. However, in some cases, this waiting period may be waived. Speak with an experienced loan officer to inquire about your specific situation.
Q: Should I hire an attorney when going through a short sale?
A: It is not required to hire an attorney when going through a short sale, but it may be beneficial. An experienced attorney can help you navigate the process and ensure that all legal requirements are met. Additionally, they can provide guidance on any other matters related to your home loan.
